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What is free rider problem in corporate governance?

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What is free rider problem in corporate governance?
posted Aug 22, 2017 by Prachi

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The free rider problem is a market failure that occurs when people take advantage of being able to use a common resource, or collective good, without paying for it, as is the case when citizens of a country utilize public goods without paying their fair share in taxes. The free rider problem only arises in a market in which supply is not diminished by the number of people consuming it and consumption cannot be restricted. Goods and services such as national defense, metropolitan police presence, flood control systems, access to clean water, sanitation infrastructure, libraries and public broadcasting services are able to be obtained through free riding.

answer Aug 24, 2017 by Vijay
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